Do New Construction Homes Appraise Higher? An In-depth Look at New House Construction in Hawaii


When it comes to real estate, one question that often arises is do new construction homes appraise higher? This question is particularly relevant in places like Hawaii, where the real estate market is dynamic and ever-evolving. This article aims to delve into this topic, providing a comprehensive understanding of the appraisal process for Hawaii home builders. We will explore the factors that influence appraisals, common issues, and how to navigate them.

Understanding the Appraisal Process for New Construction Homes

Before we address the primary question, it’s crucial to understand how the appraisal process works for new construction homes. Unlike existing homes, new constructions require a different approach. A certified appraiser, typically chosen by the lender, conducts the appraisal. They gather information on the home’s condition, comparing it to similar homes recently built and sold. This process is distinct from the appraisal of existing homes, which primarily uses the sales comparison approach. Understanding this difference is key to navigating the real estate market in Hawaii.

Factors Affecting the Appraisal of New Construction Homes

Several factors can influence the appraisal of new construction homes. One of the most significant factors is the detail of the plans and specifications. The more detailed the plans, the easier it is for the appraiser to understand the home’s value. Other factors include the quality of construction, the location, and the current market conditions in Hawaii. Understanding these factors can help both buyers and builders anticipate potential appraisal outcomes and plan accordingly.

Common Problems with New Construction Appraisals

Despite the rigorous process, new construction appraisals can sometimes present issues. One common problem is the appraisal coming in lower than the purchase price. According to The Federal National Mortgage Association, this happens about 8 out of 100 times. On the day of completion, a new house in Hawaii is typically worth 5%-20% less than its cost to build. This discrepancy can be due to various factors, including market volatility and the unique aspects of the Hawaiian real estate market. Being aware of these potential issues can help buyers and builders prepare for this possibility.

How to Challenge Low Appraisals

If a new construction home in Hawaii gets a low appraisal, it’s not the end of the road. Builders can challenge these appraisals. The process involves providing additional information that may not have been considered in the initial appraisal. This could include details about the property’s unique features, comparable sales data, or information about the Hawaiian real estate market. Knowing how to challenge a low appraisal effectively can be a valuable tool for builders and buyers in the Hawaiian real estate market.


So, do new construction homes appraise higher? The answer is not straightforward. While new construction homes in Hawaii often come with many attractive features that could potentially increase their value, the appraisal process and market conditions can lead to lower-than-expected appraisals. However, with a clear understanding of the process and the ability to challenge low appraisals, home builders and buyers can navigate this complex landscape. As always, it’s recommended to work with experienced professionals who understand the unique dynamics of the Hawaiian real estate market. This knowledge can make the difference between a successful real estate transaction and a disappointing one.

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